Xiaomi all Set for the Biggest IPO in the World Since 2014, Files for Offering in Hong Kong

Xiaomi, one of the Chinese smartphone majors, on Thursday applied to sell shares in Hong Kong, bringing to the city what is expected to be the world’s biggest IPO this year. The company submitted an IPO application to the Hong Kong Exchanges & Clearing Limited under new listing regulations for technology start-ups. Though the filing doesn’t reveal the financial terms, the Beijing based company is planning to raise at least US$10 billion, valuing their business at US$100 billion, people familiar with the plan have said. Xiaomi is after all the world’s fourth-largest smartphone maker ranked by shipment, next only to Samsung, Apple and Huawei.

Xiaomi could be the biggest IPO since Alibaba’s $25 billion debut in 2014. “It would be among the first to take advantage of new rules at the Hong Kong exchange that allow companies with more than one class of shares to list,” added a Bloomberg report.

The eight-year-old company founded by Lei Jun will go past Baidu and JD.com to become third largest Chinese technology company by value, after Tencent Holdings and Alibaba Group Holding.

In its IPO filings, Xiaomi also reported its financial details for the first time. In 2017, Xiaomi posted a net loss of 43.9 billion Yuan, down from the 491.6 million profit it made in 2016. However, Xiaomi attributed the loss is due to the issuance of preferred shares to investors.

But operating profit of the company has been climbing over the years. Excluding preferred stocks and other items, Xiaomi’s adjusted net profit almost tripled to 5.4 billion yuan, from 1.9 billion Yuan in 2016. Revenue grew over 67% year-on-year in 2017 to 114.6 billion Yuan ($18 billion).

While the company continues to diversify its business, Xiaomi still gets 70% of its revenue from selling smartphones at a razor-thin profit margin. Smart devices and a range of lifestyle products account for 20% of sales, while internet services make less than 10%.

Xiaomi also still makes 72% of revenue from China and 28% from the rest of the world. While it has consolidated its position in emerging markets like India, the firm is planning to enter developed markets to sell smartphones. It entered Spain last year and is said to be talking with U.S. carriers to sell devices in Apple’s home turf. Yesterday, it officially started selling its smartphones in the UK.

2018 will be a huge year for Xiaomi, both regarding securing market share and revenue aspect.